BU283 Study Guide - Midterm Guide: Canadian Securities Administrators, Efficient-Market Hypothesis, Dutch Auction
Document Summary
Financial market: place which suppliers and users of capital interact. (physically: toronto/ new york stocks exchange; virtually: bond and foreign exchange market) Money market: securities that mature in less that 1 year. Capital market: mature more than 1 year. Primary market: first issuance of a security. Secondary market: trades securities after their issuance 1) auction: trade in one physical or virtual location 2) dealer markets: multiple dealers. People transact through financial intermediaries, including (commercial) banks, investment banks, pension/ mutual/ hedge funds, and insurance companies. Individuals supply most of the money that intermediaries transfer to businesses and government. The primary purpose of the financial system is to efficiently move funds from those who have a surplus to those who have a need. Securities are 1. short term 2. Interest rate on money market instruments move together overtime, because all are low risk and have short-term maturities, they are close substitutes. (volatile)
